What is Bitcoin and how to trade it online

Bitcoin is one of the most-talked about ‘financial asset’ in the world today. Traders, analysts, regulators, and media professionals are currently looking more into Bitcoin, which is the biggest cryptocurrency in the world.

Bitcoin’s rise has been phenomenal. Started less than ten years by an unknown person – or group – known as Satoshi Nakamoto, Bitcoin has become the poster child of a new industry known as blockchain. Blockchain is a technology which is made up of a continuously expanding list of records known as blocks. Each of these blocks is linked and secured using a technology known as cryptography. Each of these blocks is made up of timestamp, transaction data, and a cryptographic hash. Today, the blockchain technology has been adopted by many industries including commerce and finance.

Today, Bitcoin has a market value of more than $111 billion, Bitcoin had a value of more than $300 billion. All the cryptocurrencies had a value of more than $600 billion. The value has dropped to just under $300 billion.

As a trader, there are two main ways you can make money using Bitcoin. First, you can buy Bitcoins from a Bitcoin exchange or from a friend and hold it. In this, your hope is that the price will rise and then you can sell it. In the cryptocurrencies lingo, this process is known as HODL.

The second option is that of using CFD exchanges to buy and sell cryptocurrencies. In this, you will be buying the Bitcoin at a low price with the hopes that the price will go up. If you believe that the price will go down, you will sell – or short – the Bitcoin. You will make money when the price moves down. The difference between this type of trading and the former is that in this, you don’t necessarily own the Bitcoin. Instead, you have an agreement with the broker whose lists the Bitcoin.

Bitcoin – and other cryptocurrencies – are relatively new asset classes. This makes them highly volatile. To trade Bitcoin successfully, you need to understand the fundamentals of technical and fundamental analysis.

In fundamental analysis, you look at the news and relevant information, which impacts the price of the Bitcoin. For example, if news breaks that a cryptocurrency exchange has been hacked, you should short Bitcoin because holders will likely rush to exit their positions. On the other hand, if news breaks that an influential investor is bullish on cryptocurrencies, you should buy because more traders will want to be in the same boat with the investor.

In technical analysis, you use the chart – and various technical indicators – to predict the future movements of the Bitcoin. One ideal strategy is to combine trend indicators with oscillators. The trend indicators help the traders to identify a trend. The oscillators on the other hand help the traders confirm when a trend has formed. Some of the best trend indicators are moving averages and Bollinger bands while the best oscillators are the Relative Strength Index (RSI), Stochastics, and the Relative Vigor Index (RVI).

Risk management is critical when it comes to Bitcoin trading. This means that you can easily lose your money, especially when using leverage. To protect yourself against huge losses, you should do two things. First, you should size your trades appropriately. Then, you should always use a stop loss. This tool enables you to lose funds you are comfortable losing.